The Great Recovery

The Great Recovery – Sharemarket trends

•    More than half a trillion dollars has been added to the capitalisation of the Australian sharemarket since March. Market cap currently stands at just over $1.4 trillion.

•    While the value of sharemarket has lifted almost 60 per cent since the March lows, it has also become more concentrated with almost half capitalisation held in banks and resources. And just over a third of sharemarket value is held in just six stocks – ANZ, CBA, NAB, Westpac, BHP Billiton and Rio Tinto.
The Great Recovery

•    We have had the Great Depression. And in some advanced countries the recent economic downturn has been termed the Great Recession. But more positively – and in the same vein – the strong, swift recovery of the sharemarket since March could aptly be described as the Great Recovery.

•    The value of shares on the Australian sharemarket currently stands at just over $1.4 trillion ($1404.7 billion). Since March 9, market capitalisation has lifted by over half a trillion dollars ($519.4 billion) or a gain of 58.7 per cent.

•    There is still some work to reach the highs set on November 1 2007 but it looks far more achievable than appeared the case just seven months ago. Sharemarket capitalisation needs to rise by almost 25 per cent to reach record levels.

•    Certainly the fall from grace for the Australian sharemarket was remarkable. Between November 2007 and March 2009 the value of shares on the Australian sharemarket almost halved, falling by just over $847 billion or 48.9 per cent. But since, just over $500 billion of the paper loss has been recovered with just over $300 billion to go.
With recovery comes concentration

•    The recovery of the sharemarket appears remarkable, but not if you consider the performance of the economy. If an economy grows, it will be reflected in sales, profitability and therefore in the size and value of Australian companies. The Australian economy avoided recession and is now accelerating out of a slowdown. The Reserve Bank certainly expects the economy to gain pace over the coming year as reflected by the recent decision to lift interest rates.

•    In essence the sharp decline in the value of the sharemarket was unwarranted as the Australian economy failed to follow other economies into recession.

•    The main problem is that the dollars flooding back into the sharemarket have tended to flow to the main banks and resource companies.

•    Currently three of the 19 sub-sectors account for almost half the capitalisation of the sharemarket. The S&P/ASX 200 sub-sectors – Banks, Materials & Energy – account for just over 48 per cent of sharemarket capitalisation, up from just over 39 per cent at the start of 2007.

•    In fact just six stocks account for over a third of the capitalisation of the entire sharemarket – ANZ, NAB, CBA, Westpac, BHP-Billiton and Rio Tinto. Capitalisation of these six stocks has soared by $228 billion from the lows recorded late last year.

•    If the shift of funds into the ‘Super Six’ companies just represents a shift into large, safe-haven companies at the start of the sharemarket recovery then there are few long-term implications. As the recovery matures and consolidates, investors should feel more comfortable to embrace small and medium-sized companies, leading to less concentration of sharemarket value in a small number of companies.

•    However if sharemarket value continues to be concentrated into the top stocks then key indices such as the ASX 200 and All Ordinaries will be far less representative. It is important that investors are aware of the power that the ‘Super Six’ companies exert.
Have investors become too exuberant?

•    The sharemarket has rebounded a long way in a short time period. As a result, this raises the question about whether investors have become too exuberant. And in this respect an interesting dichotomy has developed. The forward price-earnings ratio, measuring share prices against earnings forecasts stands at 17.82, well above the decade average of 16.09. However the lagged PE measure, comparing actual share prices against actual earnings, stands at 14.7, below the decade-average of 15.4.

•    Which measure is right? Analysts were pleasantly surprised by the resilience of earnings in the latest reporting season and many have sought to upgrade forecasts. But it is probably fair to say that analysts still harbour doubts. So the upgrade path still has further to go.

•    The lagged PE measure requires no adjustment of views, so in the current environment it is arguably the more accurate valuation measure. The bottom-line being that the market is neither super-cheap nor expensive. If companies continue to offer positive guidance about earnings, then the sharemarket will continue to track higher, however at a more modest pace than has been the case to date.

•    CommSec expects the sharemarket to end the year around 5,000 points and lift to 5,300 points by mid 2010.

Source Craig James, Chief Economist, CommSec

LANDLORDS LET’S PARTY!!!!!!!

Yep! Looks as though the planets are finally aligning for all you investors out there with rental returns looking mighty fine. C’mon it’s your turn to celebrate!

Our mates at AUSTRALIAN PROPERTY MONITORS recently reported that gross rental returns had either remained steady or slightly increased.

Now, normally one would have thought that our heavily reduced variable interest rates might have released the pressure on rents. Well, apparently not so.

As it turns out, rental vacancy rates are still extremely low. Particularly in Sydney. The September “Rental Vacancy Report” by the REAL ESTATE INSTITUTE OF NSW asserts that Sydney has a rental vacancy rate of just 1.3%. In fact, for the vast majority of NSW (including regional centres) the rate sits below 2%!!!

Here’s the good news – it seems that property investors will not need to drop rents to attract tenants in this environment.

Recently published population projections by the NSW GOVERNMENT show that NSW will grow by 372,600 people in 5 years. That is a touch over 1,433 people per week.

The NSW Govt. also estimates that 187,300 dwellings will need to be built during this period – 720 new dwellings every week! Compare this to the number of building commencements last financial year of 457 per week (Source: ABS) and you will no doubt see a problem looming. An estimated shortfall of 263 new dwellings every week (13,600 per annum).

Another reason for property investors to party will be the end of the first home buyers grant “Boost” on the 31st of December this year.

Whilst this boost enabled more people to get into their own home for the first time, it also scared off many investors. It seems many prospective investors will be waiting until the first home buyers’ have completed their feeding frenzy. That day approaches.

The good news for investors is that median rental yields have been building over the last five years. Every capital city in Australia now exceeds 4% p.a. and the housing shortage should support this position.

Go on investors…let your hair down, throw on your dancing shoes and strike a pose….it’s your turn now to have some fun!

Cities of dreams as value of homes begins to soar

Date: October 6, 2009

Clearly Sydney and Melbourne are leading the property market recovery and now represent two of the nation’s most popular markets.

RP Data’s national home value indices published last week reveal that for the first eight months of the year Sydney home values rose 8.6 per cent, to reach a new median value of $546,867.

Melbourne also put in a stellar performance and has found its feet again to record a stunning 11.6 per cent price increase, bringing the median value up to $467,280.

These buoyant conditions are in stark contrast to the same period last year, when values were falling, sales volumes were at rock bottom and only 45 per cent of auctions were clearing.

Now we are seeing house values rising, market activity increasing, and almost three-quarters of auctions are recording a successful result.

While the sceptics have touted this as a potential market bubble waiting to burst, the figures confirm that the residential market is protected from a downturn in values by a broad range of factors.

Interest rates are at historic lows and — although rates will be lifted over the coming months — we will need to see a rise of 150 basis points before mortgage rates reach their 10-year average of 7.3 per cent.

Importantly, housing is in undersupply and the nation’s population is growing at a faster rate than in any other country in the Western world.

Australian development is being underpinned by the fastest rate of population growth since the baby boomers.

Other factors such as the health of the financial sector and lower-than-expected unemployment figures are also likely to support the housing market.

Over the next six months capital growth is likely to moderate across the Australian market.

Interest rate rises, together with a winding back of the boost to the first-home owners’ grant, are likely to dampen demand.

Tim Lawless is the national research director of rpdata.com.

Source: The Sun-Herald

WISH US LUCK 4 SATURDAY…WILL WE WIN AGENCY OF THE YEAR?

| Date:6 October 2009

Saturday night…..do do do do do do do…..Saturday night…..do do do do do do do do……!!!!

Ahhhhhhhhhhhhhhhhhh…Real Estate’s night of nights is this coming Saturday night when the whos who of the industry will frock up, hob nob and celebrate each others achievements.

We are up for Large Residential Agency of the Year. Yep! One of only four finalists. This in itself is a massive achievement and to be completely honest we are thrilled to have come this far. Taking out the big title would certainly be the cherry on top.

We would like to wish all finalists the very best of luck for Saturday Night and we will keep our fingers and toes very tightly crossed until we hear the words “….and the winner for Real Estate Agency of the Year goes to ??????????????”….

Thump Thump Thump

GOOD NEWS FULL OFFICIAL DATA CLICK HERE

Record August growth in home values despite first home buyer demand winding back.

Capital city dwelling values – first eight months of 2009
•Sydney values up 8.6% to $546,867
•Melbourne values up 11.6% to $467,280
•Brisbane values up 5.2% to $443,197
•Adelaide values up 3.1% to $ 407,227

National property values jumped by almost 2 per cent in August in the largest monthly movement since the
RP Data‐Rismark Home Value Indices began in January 2005

According to rpdata.com research director, Tim Lawless, the August results
surprised on the upside and are indicative of very high levels of buyer
confidence combined with low levels of listings.

“These buoyant conditions sit in striking contrast to the same time last year
when values were falling, less than half of the auctions held cleared.

GOOD NEWS FULL OFFICIAL DATA CLICK HERE

A NO BRAINER FOR FIRST HOME BUYERS – NEW APARTMENTS IN MANLY VALE FROM $355 000

STUNNING OFF THE PLAN APARTMENTS IN MANLY VALE!
MANLY VALE
NEW LISTING! From $355,000

HAVE YOUR CAKE & EAT IT TOO!!!

Have it all! ‘LIME’ – A spectacular brand spanking new Northern Beaches development, it’s due for completion in 12 months time (May 2010).

Only for those who love the finer things in life, less the price tag, these one bedroom, split level apartments located in Manly Vale will start from a crazy $355,000. Stacked with features above and beyond any other new development on the Northern Beaches, you’ll be utterly impressed by the 6 x 4 metre balconies, 4 metre high ceilings (in certain apartments), skylight voids and breathtaking views en route to Manly Beach, St Patricks Cathedral, Balgowlah, Manly Vale & the Freshwater District… ….ahhhhhhhhhhhhhhhhhhhhhhhh!

Indulge in platinum quality fittings featuring massive dual sliding glazed doors to the patios, Smeg appliances and a sexy colour selection of carpets, paints and cabinetry that all combine to create a home of distinction & flavour!

Smell the coffee, jump the bus to the CBD or skip to the beach from this neat boutique block of just 10…why not? It’s all right at your doorstep!

This has to be the number one choice for first home buyers and investors.

FIRST HOME BUYERS – cash in and enjoy the $21,000 grant from the Government and also pay $0 stamp duty!!!

INVESTOR BUYERS – cash in and enjoy the massive benefits of new building depreciation and negative gearing benefits!!!

Ultra low interest rates, a brilliant price tag, low Body Corporate levies and a bag full of government incentives combine to make ‘LIME’ the BUY OF THE YEAR!!!

View the display suite for ‘LIME’ at The Novak Agency. Be quick, these will sell like hotcakes!!!

Check them out…..click here

THE NOVAK AGENCY SETS THE RECORD STRAIGHT ON BUYING, EXCHANGING & SETTLING BEFORE JUNE 30!

| Date:11 May 2009

So much confusion, so many fallacies, so many wrong answers!

The Novak Agency is here to set the record straight on purchasing a property before the First Home Buyer Grant ’officially’ ends on June 30.

We have put together a little list of the most commonly asked questions that we are certain will clear up all sorts of topics on buying and selling prior to June 30:

1. DO I NEED TO HAVE SETTLED OR JUST EXCHANGED ON A PROPERTY BEFORE JUNE 30 IN ORDER TO STILL GET THE GRANT?

The great news is you only need to have EXCHANGED on the property, not settled!!!!

2. IF I WANT TO BUY A BRAND NEW PROPERTY, DOES IT NEED TO BE BUILT BY 30 JUNE IN ORDER FOR ME TO STILL BE ABLE TO GET THE GRANT?

NO! However the construction of the property must be due to commence within 6 months of signing the contract and must be completed within 18 months from that commencement.

3. WHEN DO I NEED TO START REPAYING MY LOAN ON A NEW/OFF THE PLAN PROPERTY?

The great news is….not until you settle. No repayments are necessary until the property settles!

4. ARE THERE ANY OTHER FIRST HOME BUYER SUPPLEMENTS?

YES! There are some other financial supplements that many people may not know if such as the NSW New Home Buyers Supplement and also heavily reduced and even completely exempt Stamp Duty concessions! For further info go to http://www.firsthome.gov.au/ then select your state.

5. IS NOW STILL A GOOD TIME TO PUT MY PROPERTY ON THE MARKET?

YES! There are still loads of buyers scouting around frantically wishing to make a purchase. REMEMBER the EXCHANGE needs to take place by June 30 not the SETTLEMENT.

6. WHAT ABOUT STAMP DUTY?

Stamp duty is exempt on properties up to $500 000 i.e YOU PAY NO STAMP DUTY AT ALL Stamp duty comes into effect on properties with a value of $500 000 or more however MASSIVE stamp duty concessions apply i.e on a property priced $510 000 the stamp duty usually would be $18 440 however with the new government grant YOU ONLY PAY $2249….that is a saving of $16191.00.

Want to know more? Call The Novak Agency on 1300 4 NOVAK OR 8978 6888. We’re here to help 24/7 – we never sleep! OR visit our website

We also have some fantastic first home owner properties all around the Northern Beaches of Sydney….Dee Why, Collaroy, Freshwater, Queenscliff! Check them out, they WILL NOT last….click here

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THE RACE IS ON – 57 DAYS TO GO!

Ready, set, go!

If you’re reading this chances are you’re a first home buyer who hasn’t yet purchased your first home! Right?

Well, you have 57 days to buy that home! Why rent when you could be paying the same, if not less, and own your home!

Our lovely PM is literally handing you money on a platter to purchase your first home and with interest rates at an all time low, it is THE absolute best time to buy your very own home.

For those looking to buy an already existing property, you’ll be given $14000.00 and for a brand new property you’ll get a whopping $21 000.00.

To make things ridiculously clear we have written a very clear & simple list of facts for the first home buyer…

1. You must be an Australian Citizen or Resident and have never previously owned a property

2. The grant varies from state to state however here in NSW the grant has increased (until 30 June 2009) to $14000 for existing residences (not newly built) and $21 000 for an unlived in or brand new residence

3. The Government gives you the first home buyers grant in the form of cash to add to your deposit and this is usually paid for at the time of settlement

4. If you wish to apply for the grant go to www.osr.nsw.gov.au and fill in the application form

5. Stamp duty is exempt on properties up to $500 000 i.e YOU PAY NO STAMP DUTY AT ALL

6. Stamp duty comes into effect on properties with a value of $500 000 or more however MASSIVE stamp duty concessions apply i.e on a property priced $510 000 the stamp duty usually would be $18 440 however with the new government grant YOU ONLY PAY $2249….that is a saving of $16191.00

7. For more info on stamp duty and for an idiots guide to discounts applying to stamp duty go to www.mortgageworldaustralia.com.au/Assets/firsthmplusNSW.pdf. We have loads of fantastic first home buyer properties. Like the rest of Sydney, take advantage of the governments golden handshake

Check out The Novak Agency ad on the back page of The Manly Daily, surf our site for all of our latest properties or call us on 1300 4 NOVAK (or 8978 6888) to tell us exactly what you want, we’ll find it for you. We work 24/7….we never sleep!

Good news !!! Going up?

Business confidence recorded solid gains in the first quarter of 2009, but growth in 1Q09 appears to have been weak, with actual conditions deteriorating further.

Confidence improved by 7 points to -24, while conditions fell by 4 points to -20. The decline in conditions was once again consistent across the components, with trading (down 10 points to -20), profitability (down 5 points to -21) and employment (down 9 points to -25) all recording declines.

The survey provides a grim outlook on the prospects for the labour market, with only 5% of firms reporting any difficulty in finding suitable labour — compared to 30% a year ago.

THERE IS LIFE AFTER JUNE 30! THE NOVAK AGENCY TALKS ABOUT PROPERTY POST 30 JUNE…

| Date:27 April 2009

The sad fact is that all good things must come to end and irrespective of whether Mr Rudd chooses to extend the first home buyers grant past June 30 or not, the truth is the bubble will have to burst eventually!

So, while many of us our placing bets on whether or not the grant will come to a grinding halt come 30 June, many people are interested to know exactly what will happen to the market when the “party” ends.

There is no doubt that the first home buyers grant has served it’s purpose and has made the lower end of the property market very um hyperactive so to speak. The question on everyones lips is….can the property market stand tall without the government grant propping it up?

In times such as these when the world is in the brink of a recession, there is still a heck of alot of people out there with cash under their mattresses.

With the crash of the stock market many investors pulled their money out of shares and are re investing it into the property market which is by far a very solid, fabulous long term investment.

It is these investors that will keep the property market bopping along at a steady pace!

Media reports show that blue chip areas such as pockets of the Eastern Suburbs, Northern Beaches and the lower North Shore are all remaining rock solid, particularly at the lower end of the market. Additionally, the grant may come to an end come June 30 however let’s not forget that interest rates are still ridiculously low – take advantage of a property purchase based on that fact alone!

Hey, 3 years ago if someone told you they would loan you money for purchasing a property at 5%, who wouldn’t have jumped at the opportunity!!!

The Novak Agencies tip – DON’T PANIC! If you can, take advantage of the grant….there’s only 69 days to go until it officially ends. You can buy some fantastic properties at great prices!

Right now…the market is insane. There are literally thousands of first homie scouters out there wanting to grab a piece of the pie and rightly so…there are some fabulous purchases on hand.

The Novak Agency has some incredible first home buyer properties located in Dee Why, Collaroy and Freshwater. Check them out or call us on 1300 4 NOVAK or 8978 6888 – 24/7, we never sleep!